In the third quarter of 2026, alternative investments (“alternatives”) on average had positive returns that were competitive if not slightly better than traditional asset returns. Oil prices along with interest rates soared, putting ever greater strain on the global economy. Record diesel prices have become a key focus because diesel fuel is a vital component of domestic and international transportation infrastructure. Large capitalization stocks managed a positive return, but small capitalization stocks fell sharply as they tend to be more responsive to changes in risk factors. Thanks to robust earnings, valuations have come down but remain elevated by several measures. The Federal Reserve raised rates a quarter point at the September meeting, acknowledging that inflation was still an issue. Weaker jobs data is providing investors hope that more rate hikes will not be forthcoming and that a soft employment backdrop will break the inflation trend. While some inflationary data is trending lower, most measures still indicate that a 2% target is a way off and may not be achievable in the near-term, especially with the volatile situation in the Middle East.

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